Raise Taxes on the One Percent?

Bernie Sanders Would Tax The Income Of The Wealthiest Americans At 90 Percent.

In an interview with CNBC’s John Harwood, Sen. Bernie Sanders (I-VT), who is running for the Democratic presidential candidacy, said he could back a 90 percent top marginal tax rate.

Harwood brought up that some have likened efforts to combat income inequality to Nazi Germany. Sanders noted sarcastically, “When radical, socialist Dwight D. Eisenhower was president, I think the highest marginal tax rate was something like 90 percent.”

Harwood followed up by asking, “When you think about something like 90 percent, you don’t think that’s obviously too high?” to which Sanders replied, “No.”

He continued, “What I think is obscene . . . when you have the top one-tenth of one percent owning almost as much as the bottom 90.” [. . .]

“If you have seen a massive transfer of wealth from the middle class to the top tenth of one percent, you’ve got to transfer that back.”

Sanders is, in my admittedly humble opinion, spot-on correct in re his tax proposal. A somewhat closer examination (simplistic and scavenged as it is) of top bracket income tax rates across the last near century suggests that a drastic Sanders-style revision of America’s income tax process is long overdue and should perhaps assume a position of top priority:

1918 46%-76% — Post WWI, income taxes became central to federal funding
1925 25% — Stock market crashed in 1929, onset of Great Depression
1932 63% — Tax hike under FDR to counter the depression and joblessness, etc.
1939 79% — Tax raised in anticipation of war in Europe and the Pacific
1940 81%
1942 82% — Post Pearl Harbor, onset of the Second World War
1944 91%
1946 86.4% — Postwar reduction
1948 82.1% — Further reduction
1950 84.4% — Korea
1951 91% — Korea
1964 77% — Rate resulting from JFK’s 1963 tax reduction proposal
1982 50% — Reagan “trickle down” begins
1985 33% — More trickle down
1988 28% — (before write-offs and loopholes, see below)*
1991 31% — Poppy Bush
1993 39.6% — Bill Clinton
2001 39.1% — GWBush
2002 38.6%
2005 35%
2008 — Economic crisis, severe recession, near depression
2012 39.6% – Bush tax cuts eliminated for incomes exceeding $450,000

* According to the Congressional Budget and Accounting Offices, those in the top bracket actually are now, thanks to write-offs and other “legitimate” loopholes, taxed at rates which can wind up ranging anywhere from 0% to 18%.  At the same time, there’s never been so much private offshore investment income (as well as corporate income from offshore manufacturing) that remains totally UNTAXED as there is today. Additionally, there are tax loopholes currently in place that are solely designed to benefit giant multinational corporations. Exxon-Mobil, for example, at the time of its highest profit in history, paid ZERO in taxes and, in addition, received a government rebate of several million$ that same year (your tax dollars at work). Overall, America’s most prosperous, most productive modern era — the abbreviated era in which both the middle class AND the national economy grew the most — occurred in the post-WWII years and lasted until Reagan and conservative “trickle down” policies took over in the 1980’s.

Economic conclusions are tricky to assess simply via raw tax rate data examination, but a few things seem obvious nonetheless. For example, when top bracket rates are at their lowest, economic depression/severe recession can be interpreted to appear as potential consequences; and contrary to the popular political premise, economic development does NOT improve or increase just because tax rates are low. Conversely, it’s when top bracket rates are highest that the economy grows and middle class prosperity accelerates — even as those in the top brackets remain in the top brackets, undamaged. Also, “trickle down” of top bracket prosperity to middle and lower income classes is clearly a myth, the reality being more the inverse. In Robin Hoodian terms, trickle down seems to be a case where the rich are allowed to steal from the poor — and keep it.

Bernie Sanders effectively summarizes the solution to this nation’s current (and fruitless) thirty-five year era of greed-imposed economic woes in one sentence:

“In the last 30 years, there has been a massive — we’re talking about many trillions of dollars — being redistributed from the middle class to the top 1/10th of 1 percent.”

Indeed. And the most effective and efficient means of getting that done is by following the course Eisenhower used in the economically prosperous 1950’s: tax the wealthiest Americans at a 90% rate.and spread the wealth around. Elevate education and educational facilities nationwide. Make it possible for young people to get a college degree without incurring massive debt in the process. Put people to work; repair and maintain infrastructure; invest in renewable energy; invest in maintenance and preservation of public lands across the nation; remove corporate tax credits and tax loopholes; tax large financial estates; tax investment income at the same rate as other income; disallow offshoring tax avoidance schemes; if the choice is made to start a stupid war, pay for it with taxes, not by borrowing.

Things have gone terribly wrong in this country over the last thirty-five (at least) years, and the time has come to effectuate permanent repairs. Remember: “If you have seen a massive transfer of wealth from the middle class to the top tenth of one percent, you’ve got to transfer that back.”

Amen to the concept. I happen to think that the best solution overall would be to tax the 1% at a 99% rate and the 99% at a 1% rate; fair’s fair, after all. But in the interim I’ll go with Bernie and a 90% top bracket rate — and hope for the best in future years.

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About frugalchariot

How Frugal is the Chariot That bears the Human soul. (Emily Dickinson)
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